7. Fuel cell technology that uses, as determined by the commission, a renewable fuel.

(k) "Renewable resource program" means a program for encouraging the development or use of customer applications of renewable resources, including educating customers or members about renewable resources, encouraging customers or members to use renewable resources, and encouraging the transfer of new or emerging technologies from research, development, and demonstration to commercial implementation.

(L) "Retail electric cooperative" has the meaning given in s. 16.957 (1) (t).

(n) "Wholesale supplier" has the meaning given in s. 16.957 (1) (w).

(o) "Wholesale supply percentage" has the meaning given in s. 16.957 (1) (x).

(2)Energy efficiency and renewable resource programs. (a) Statewide programs. 1. The energy utilities in this state shall collectively establish and fund statewide energy efficiency and renewable resource programs. The energy utilities shall contract, on the basis of competitive bids, with one or more persons to develop and administer the programs. The utilities may not execute a contract under this subdivision unless the commission has approved the contract. The commission shall require each energy utility to spend the amount required under sub. (3) (b) 2. to fund statewide energy efficiency and renewable resource programs.

2. The purpose of the programs under this paragraph shall be to help achieve environmentally sound and adequate energy supplies at reasonable cost, consistent with the commission's responsibilities under s. 196.025 (1) (ar) and the utilities' obligations under this chapter. The programs shall include, at a minimum, all of the following:

a. Components to address the energy needs of residential, commercial, agricultural, institutional, and industrial energy users and local units of government.

b. Components to reduce the energy costs incurred by local units of government and agricultural producers, by increasing the efficiency of energy use by local units of government and agricultural producers. The commission shall ensure that not less than 10 percent of the moneys utilities are required to spend under subd. 1. or sub. (3) (b) 2. is spent annually on programs under this subdivision except that, if the commission determines that the full amount cannot be spent on cost-effective programs for local units of government and agricultural producers, the commission shall ensure that any surplus funds be spent on programs to serve commercial, institutional, and industrial customers. A local unit of government that receives assistance under this subd. 2. b. shall apply all costs savings realized from the assistance to reducing the property tax levy.

c. Initiatives and market strategies that address the needs of individuals or businesses facing the most significant barriers to creation of or participation in markets for energy efficient products that the individual or business manufactures or sells or energy efficiency services that the individual or business provides.

d. Initiatives for research and development regarding the environmental and economic impacts of energy use in this state.

3. The commission may not require an energy utility to administer or fund any energy efficiency or renewable resource program that is in addition to the programs required under subd. 1. and any ordered program of the utility. This subdivision does not limit the authority of the commission to enforce an energy utility's obligations under s. 196.378.

(b) Utility-administered programs. 1. An energy utility may, with commission approval, administer or fund one or more energy efficiency programs that is limited to, as determined by the commission, large commercial, industrial, institutional, or agricultural customers in its service territory. An energy utility shall pay for a program under this subdivision with a portion of the amount required under sub. (3) (b) 2., as approved by the commission. The commission may not order an energy utility to administer or fund a program under this subdivision.

2. An energy utility may, with commission approval, administer or fund an energy efficiency or renewable resource program that is in addition to the programs required under par. (a) or authorized under subd. 1. The commission may not order an energy utility to administer or fund a program under this subdivision.

3. An energy utility that administers or funds a program under subd. 1. or 2. or an ordered program may request, and the commission may approve, to modify or discontinue, in whole or in part, the ordered program. An energy utility may request the establishment, modification, or discontinuation of a program under subd. 1. or 2. at any time and shall request the modification or discontinuation of an ordered program as part of a proceeding under sub. (3) (b) 1.

(c) Large energy customer programs. A customer of an energy utility may, with commission approval, administer and fund its own energy efficiency programs if the customer satisfies the definition of a large energy customer for any month in the 12 months preceding the date of the customer's request for approval. A customer may request commission approval at any time. A customer that funds a program under this paragraph may deduct the amount of the funding from the amount the energy utility may collect from the customer under sub. (5) (b). If the customer deducts the amount of the funding from the amount the energy utility may collect from the customer under sub. (5) (b), the energy utility shall credit the amount of the funding against the amount the energy utility is required to spend under sub. (3) (b) 2.

(3)Commission duties. (a) In general. The commission shall have oversight of programs under sub. (2). The commission shall maximize coordination of program delivery, including coordination between programs under subs. (2) (a) 1., (b) 1. and 2., and (c) and (7), ordered programs, low-income weatherization programs under s. 16.957, renewable resource programs under s. 196.378, and other energy efficiency or renewable resource programs. The commission shall cooperate with the department of natural resources to ensure coordination of energy efficiency and renewable resource programs with air quality programs and to maximize and document the air quality improvement benefits that can be realized from energy efficiency and renewable resource programs.

(b) Programs and funding. 1. At least every 4 years, after notice and opportunity to be heard, the commission shall, by order, evaluate the energy efficiency and renewable resource programs under sub. (2) (a) 1., (b) 1. and 2., and (c) and ordered programs and set or revise goals, priorities, and measurable targets for the programs. The commission shall give priority to programs that moderate the growth in electric and natural gas demand and usage, facilitate markets and assist market providers to achieve higher levels of energy efficiency, promote energy reliability and adequacy, avoid adverse environmental impacts from the use of energy, and promote rural economic development.

2. The commission shall require each energy utility to spend 1.2 percent of its annual operating revenues to fund the utility's programs under sub. (2) (b) 1., the utility's ordered programs, and the utility's share of the statewide energy efficiency and renewable resource programs under sub. (2) (a) 1. Subject to approval under subd. 3., the commission may require each energy utility to spend a larger percentage of its annual operating revenues to fund these programs. The commission may make such a requirement based on the commission's consideration of all of the following:

a. Studies of potential energy-efficiency improvements that could be made in this state, including at least one study completed within the preceding 2 years that provides a prospective 5-year and 10-year estimate of such potential that is cost-effective.

b. The potential short-term and long-term impacts on electric and natural gas rates and alternative means to mitigate such impacts.

c. The impact on the continuation and effectiveness of existing energy efficiency and renewable resource programs, and the ability of such programs to capture time-limited and cost-effective energy-efficiency opportunities.

d. The impact on the reliability and adequacy of systems for the generation and transmission of electricity and the transmission of natural gas.

e. Societal impacts.

f. The potential for displacing or delaying construction of electric generating plants and transmission lines.

g. Economic impacts that are likely to accrue from reducing state and private expenditures on coal, natural gas, fuel oil, and other fossil fuel imports.

h. Any other relevant factors.

3. The commission shall submit to the joint committee on finance any proposal to require each energy utility to spend a larger percentage of its annual operating revenues than the percentage specified in subd. 2. (intro.) to fund the programs specified in subd. 2. (intro.). If the cochairpersons of the committee do not notify the commission within 10 working days after the commission submits such a proposal that the committee has scheduled a meeting to review the proposal, the commission may require each energy utility to spend the percentage specified in the proposal. If, within 10 working days after the commission submits a proposal, the cochairpersons of the committee notify the commission that the committee has scheduled a meeting to review the proposal, but, within 90 days of providing the notice, the committee does not object to the proposal, the commission may require each energy utility to spend the percentage specified in the proposal. If, within 90 days after providing the notice, the committee objects to the proposal, the commission may not require each energy utility to spend the percentage specified in the proposal.

(c) Reviews and approvals. The commission shall do all of the following:

1. Review and approve contracts under sub. (2) (a) 1. between the energy utilities and program administrators.

2. Review requests under sub. (2) (b). The commission may condition its approval of a request under sub. (2) (b) as necessary to protect the public interest. The commission shall approve a request under sub. (2) (b) 1. or 2. if the commission determines that a proposed energy efficiency or renewable resource program is in the public interest and satisfies all of the following:

a. The program has specific savings targets and performance goals approved by the commission.

b. The program is subject to independent evaluation by the commission.

(d) Audits. Annually, the commission shall contract with one or more independent auditors to prepare a financial and performance audit of the programs specified in par. (b) 1. The purpose of the performance audit shall be to evaluate the programs and measure the performance of the programs against the goals and targets set by the commission under par. (b) 1. The person or persons with whom the energy utilities contract for program administration under sub. (2) (a) 1. shall pay the costs of the audits from the amounts paid under the contracts under sub. (2) (a) 1.

(e) Reports. Annually, the commission shall prepare and post on the commission's Internet site a report and submit a summary of not more than 2 pages to the legislature under s. 13.172 (2). The reports shall describe each of the following:

1. The expenses of the commission, utilities, and program administrators contracted under sub. (2) (a) 1. in administering or participating in the programs under sub. (2) (a) 1.

2. The effectiveness of the programs specified in par. (b) 1. and sub. (7) in reducing demand for electricity and increasing the use of renewable resources owned by customers or members.

3. The results of audits under par. (d).

4. Any other information required by the commission.

(f) Rules. The commission shall promulgate rules to establish all of the following:

1. Procedures for energy utilities to collectively contract with program administrators for administration of statewide programs under sub. (2) (a) 1. and to receive contributions from municipal utilities and retail electric cooperatives under sub. (7) (b) 2.

2. Procedures and criteria for commission review and approval of contracts for administration of statewide programs under sub. (2) (a) 1., including criteria for the selection of program administrators under sub. (2) (a) 1.

(4)Discrimination prohibited; competition. (a) In implementing programs under sub. (2) (a) 1., including the awarding of grants or contracts, a person who contracts with the utilities under sub. (2) (a) 1., or a person who subcontracts with such a person:

1. May not discriminate against an energy utility or its affiliate or a wholesale supplier or its affiliate solely on the basis of its status as an energy utility or its affiliate or wholesale supplier or its affiliate.

2. Shall provide services to utility customers on a nondiscriminatory basis and subject to a customer's choice.

(b) An energy utility that provides financing under an energy efficiency program under sub. (2) (b) 1. or 2. for installation, by a customer, of energy efficiency or renewable resource processes, equipment, or appliances, or an affiliate of such a utility, may not sell to or install for the customer those processes, equipment, appliances, or related materials. The customer shall acquire the installation of the processes, equipment, appliances, or related materials from an independent contractor of the customer's choice.

(5)Cost recovery. (a) Rate-making orders. The commission shall ensure in rate-making orders that an energy utility recovers from its ratepayers the amounts the energy utility spends for programs under sub. (2) (a) 1.

(b) Large energy customers. 1. Except as provided in sub. (2) (c) and par. (bm) 2., if the commission has determined that a customer of an energy utility is a large energy customer under 2005 Wisconsin Act .... (this act), section 102 (8) (b), then, each month, the energy utility shall collect from the customer, for recovery of amounts under par. (a), the amount determined by the commission under 2005 Wisconsin Act .... (this act), section 102 (8) (c).

2. A customer of an energy utility that the commission has not determined is a large energy customer under 2005 Wisconsin Act .... (this act), section 102 (8) (b), may petition the commission for a determination that the customer is a large energy customer. The commission shall determine that a petitioner is a large energy customer if the petitioner satisfies the definition of large energy customer for any month in the 12 months preceding the date of the petition. If the commission makes such a determination, the commission shall also determine the amount that the energy utility may collect from the customer each month for recovery of the amounts under par. (a). The commission shall determine an amount that ensures that the amount collected from the customer is similar to the amounts collected from other customers that have a similar level of energy costs as the customer. Except as provided in sub. (2) (c) and par. (bm) 2., each month, the energy utility shall collect from the customer, for recovery of amounts under par. (a), the amount determined by the commission under this subdivision.

(bm) Allocation proposal. 1. The commission shall commence a proceeding for for creating a proposal for allocating within different classes of customers an equitable distribution of the recovery of the amounts under par. (a) by all energy utilities. The purpose of the allocation is to ensure that customers of an energy utility within a particular class are treated equitably with respect to customers of other energy utilities within the same class. No later than December 31, 2008, the commission shall submit the proposal to the governor and chief clerk of each house of the legislature for distribution to the appropriate standing committees of the legislature under s. 13.172 (3).

2. If, by July 1, 2009, legislation based on the proposal under subd. 1. has not been enacted, the commission shall, beginning on July 1, 2009, annually increase the amount that an energy utility may recover from a large energy customer each month under par. (b) only by a percentage that is the lesser of the following:

a. The percentage increase in the energy utility's operating revenues during the preceding year.

b. The percentage increase in the consumer price index for all urban consumers, U.S. city average, as determined by the U.S. department of labor, during the preceding year.

(c) Accounting. The commission may prescribe the accounting treatment of energy utility expenditures required under this section, including the use of any escrow accounting.

(d) Equitable contributions. Subject to pars. (b) and (bm) 2., the commission shall ensure that the cost of energy efficiency and renewable resource programs is equitably divided among customer classes so that similarly situated ratepayers contribute equivalent amounts for the programs.

(5m)Benefit and grant opportunities. (a) The commission shall ensure that, on an annual basis, each customer class of an energy utility has the opportunity to receive grants and benefits under energy efficiency programs in an amount equal to the amount that is recovered from the customer class under sub. (5) (a). Biennially, the commission shall submit a report to the governor, and the chief clerk of each house of the legislature for distribution to the legislature under s. 13.172 (2), that summarizes the total amount recovered from each customer class and the total amount of grants made to, and benefits received by, each customer class.

(b) The commission shall ensure that customers throughout the state have an equivalent opportunity to receive the benefits of the programs under sub. (2) (a) 1. and (b) 1. The commission shall ensure that statewide programs are designed to ensure that retail customers in areas not served by programs under sub. (2) (b) 1. receive equivalent opportunities as those in areas served by programs under sub. (2) (b) 1.

(6)Annual statements. Annually, the commission shall prepare a statement that describes the programs under sub. (2) (a) 1., (b) 1. and 2., and (c), and ordered programs, administered or funded by the energy utility and presents cost and benefit information for those programs. An energy utility shall provide each of its customers with a copy of the statement.

(7)Municipal utilities and retail electric cooperatives. (a) Requirement to charge fees. 1. Each retail electric cooperative and municipal utility shall charge a monthly fee to each customer or member in an amount that is sufficient for the retail electric cooperative or municipal utility to collect an annual average of $8 per meter. A retail electric cooperative or municipal utility may determine the amount that a particular class of customers or members is required to pay under this subdivision and may charge different fees to different classes of customers or members.

2. Notwithstanding subd. 1., in any month, the monthly fee under subd. 1. may not exceed 1.5 percent of the total of every other charge for which the member or customer is billed for that month or $375 per month, whichever is less.

(b) Commitment to community programs. 1. Except as provided in subd. 2., each retail electric cooperative and municipal utility shall spend the fees that it charges under par. (a) on commitment to community programs. The purpose of the programs under this paragraph shall be to help achieve environmentally sound and adequate energy supplies at reasonable cost.

2. No later than October 1, 2007, and no later than every 3rd year after that date, each municipal utility or retail electric cooperative shall notify the commission whether it has elected to contribute the fees that it charges under par. (a) to statewide programs established under sub. (2) (a) 1. in each year of the 3-year period for which it has made the election. If a municipal utility or retail electric cooperative elects to contribute to the statewide programs established under sub. (2) (a) 1., the utility or cooperative shall contribute the fees that it collects under par. (a) to the payment of contracts under sub. (2) (a) 1. for administration of the statewide programs, as specified in the rules under sub. (3) (f) 1., in each year of the 3-year period for which the utility or cooperative has made the election.

(c) Wholesale supplier credit. If a wholesale supplier has established an energy efficiency or load management program, a municipal utility or retail electric cooperative that is a customer or member of the wholesale supplier may include an amount equal to the product of the municipal utility's or retail electric cooperative's wholesale supply percentage and the amount that the wholesale supplier has spent on energy efficiency or load management programs in a year in calculating the amount that the municipal utility or retail electric cooperative has spent on commitment to community programs under par. (b).

(d) Joint programs. Municipal utilities or retail electric cooperatives may establish joint commitment to community programs, except that each municipal utility or retail electric cooperative that participates in a joint program shall comply with the spending requirements under par. (b).

(e) Reports. 1. Annually, each municipal utility and retail electric cooperative that spends the fee that it charges under par. (a) for commitment to community programs under par. (b) shall provide for an independent audit of its programs and submit a report to the commission that describes all of the following:

a. An accounting of fees charged to customers or members under par. (a) in the year and expenditures on commitment to community programs under par. (b), including any amounts included in the municipal utility's or retail electric cooperative's calculations under par. (c).

b. A description of commitment to community programs established by the municipal utility or retail electric cooperative in the year.

c. The effectiveness of the commitment to community programs in reducing demand for electricity by customers or members.

d. The results of audits under this subdivision.

2. The commission shall require that municipal utilities and retail electric cooperatives file reports under subd. 1. electronically, in a format that allows for tabulation, comparison, and other analysis of the reports.

3. The commission shall maintain reports filed under subd. 1. for at least 6 years.

(8)Compliance. An energy utility that spends the full amount required under sub. (3) (b) 2. in any year is considered to have satisfied its requirements under this section for that year.

196.378 (1) (ar) "Biomass" means a resource that derives energy from wood or plant material or residue, biological waste, crops grown for use as a resource or landfill gases. "Biomass" does not include garbage, as defined in s. 289.01 (9), or nonvegetation-based industrial, commercial or household waste, except that "biomass" includes refuse-derived fuel used for a renewable facility that was in service in this state before January 1, 1998.

141,71Section
71. 196.378 (1) (ag) of the statutes is created to read:

141,76Section
76. 196.378 (1) (fm) of the statutes is created to read:

196.378 (1) (fm) "Renewable energy percentage" means, with respect to an electric provider for a particular year, the percentage that results from dividing the sum of the following by the total amount of electricity that the electric provider sold to retail customers or members in that year:

1. The electric provider's total renewable energy in that year.

2. The renewable resource credits created or purchased by the electric provider, if any, that the electric provider elects to use in that year.